The behavior of foreign investment in Mexico is on an upward trajectory, with a significant increase in FDI recorded in the first six months of 2024. Figures from the Ministry of Economy reveal that over $31 billion flowed into the country during this period, marking a 7% rise from 2023. This growth in foreign investment in Mexico, outpacing the overall economy, is a promising sign for the future pace of economic activity. Such a substantial influx of capital reflects international investors’ ongoing interest and confidence in the Mexican market. It remains one of the most attractive destinations for foreign investment in Latin America due to its strategic location, trade agreements, and competitive labor costs.

Sectoral Distribution of Foreign Investment in Mexico

The composition of this foreign investment is particularly noteworthy, as it underscores the sectors driving economic growth in Mexico. According to the Mexican Institute for Competitiveness (IMCO), 26% of the total foreign investment in Mexico is concentrated in manufacturing transportation equipment. This sector, encompassing the automotive and aerospace industries, has long been a pillar of Mexico’s economy, benefiting from the country’s proximity to the United States, skilled workforce, and well-established supply chains. A 22% increase in investment in this sector compared to the same period in 2023 highlights its resilience and the ongoing demand for Mexican-made transportation equipment.

Similarly, the beverage and tobacco industry has attracted 14% of the total FDI, a 76% increase from the previous year. This surge can be attributed to the solid domestic and international demand for Mexican beverages, particularly in the spirits and soft drinks segments, where brands have established a global presence. The mining sector, which accounts for 10% of the FDI, has seen an extraordinary 307% increase, reflecting the global demand for minerals and metals essential for various industries, including technology and renewable energy.

Additionally, 4% of the foreign direct investment in Mexico is directed toward the chemical industry, which is critical in supplying raw materials for manufacturing processes across various sectors. The remaining investment is spread across other industries, further diversifying the economic base and reducing dependency on any single sector.

Anomalous Trends in FDI Composition

However, despite these positive developments, the composition of foreign investment in Mexico could be more stable and consistent with what is expected. Analyzing the period between 2006 and 2023, foreign investment in Mexico has traditionally been divided into three components: new investments, reinvestment of profits, and intercompany accounts. Historically, new investments have been a significant driver of FDI, averaging 55% between 2006 and 2013. This figure dropped to 30% between 2014 and 2022; in 2023, it fell further to 13%. Alarmingly, in the first half of 2024, only 1% of FDI was allocated to new investments, signaling a dramatic shift.

The reinvestment of profits has remained relatively stable, averaging 37% of total FDI. This stability suggests that existing companies are confident in Mexico’s economic environment and are reinvesting their earnings rather than repatriating them. However, the investment dynamics in intercompany accounts, which reflect the financial transactions between related entities in different countries, have shown a downward trend, from 25% at the beginning of the analysis period to 14% in 2023. This year, the percentage is zero, indicating that 97% of the $31 billion is exclusively reinvestment of profits, with no new capital inflows from parent companies abroad.

Implications of Reinvestment Dominance

The dominance of reinvestment in foreign direct investment in Mexico has both positive and negative implications. On the positive side, companies’ reinvestment of profits speaks well of their financial discipline and the dynamics of the domestic market. It reflects the confidence of established investors in the stability and potential of the Mexican economy. Companies are choosing to reinvest their earnings in Mexico, which can lead to business expansion, job creation, and increased economic activity.

However, the sharp decline in new investments is concerning. The lack of new investments indicates that no new national or foreign companies are being created, limiting the infusion of fresh capital, technology, and innovation into the economy. This stagnation in new ventures could hinder the country’s long-term growth prospects, particularly in the context of global trends like nearshoring, where Mexico has significant potential but appears to be underperforming. Despite favorable economic conditions and government incentives to attract new investments, the expected influx of new companies has yet to materialize. This could be due to various factors, including insecurity, changes in administrations in Mexico and the United States, and legal uncertainty, which may deter new entrants.

Conclusion: Balancing FDI Growth and Structural Shifts

The evolving landscape of foreign investment in Mexico presents promising and concerning trends. On the one hand, the robust growth in FDI, particularly within critical sectors like transportation equipment manufacturing, beverages, tobacco, and mining, indicates a robust economic momentum that could bolster Mexico’s economic activity in the near term. The substantial increase in reinvestment of profits reflects confidence among existing investors in the country’s economic stability and market potential.

On the other hand, the sharp decline in new investments and the complete absence of intercompany accounts signify a worrying structural shift. The lack of new investments suggests that Mexico may not be as attractive to new ventures or foreign companies as it once was, despite favorable economic conditions and government incentives. This could hinder the country’s long-term growth prospects, particularly in light of the global nearshoring trend. Mexico has the potential to become a significant hub but needs to capitalize on this opportunity entirely.

To reverse this trend and ensure sustainable economic growth, policymakers must carefully analyze the underlying factors driving these shifts. Addressing legal uncertainty, political changes, and security concerns will restore investor confidence and attract new investments. As Mexico approaches the end of the year, the government must implement strategies to attract new investments while maintaining the confidence of existing investors. Only through a balanced and proactive approach can Mexico ensure sustainable economic growth and fully capitalize on its strategic advantages in the global market.

Foreign investment in Eastern Antioquia, Colombia, continues to grow due to the region’s strategic location and expanding infrastructure. More than two hundred million dollars have flowed into this subregion, strategically located near the José María Córdova International Airport and the Rionegro Free Trade Zone. This development has turned it into a strategic hub for enhancing the international competitiveness of Antioquia and the country. Its natural beauty and economic potential have made it a magnet for foreign investment in Eastern Antioquia, Colombia. The José María Córdova International Airport (JMC) and the Rionegro Free Trade Zone are critical to its competitiveness.

Extensive connectivity

The airport offers connectivity to twelve national destinations, including Bogotá, Cali, and Barranquilla, as well as twenty direct international destinations, such as Madrid (Spain), New York, Miami, Mexico City, Panama City, Lima, Buenos Aires, and Santiago de Chile. In less than 6 hours, travelers can connect with the major business capitals of the continent, further driving foreign investment in Eastern Antioquia, Colombia.

“The current conditions create promising scenarios for investment projects that impact the local economy, such as the adaptation of agricultural technology, opportunities in the consolidation of the aerospace sector, and potential developments in pharmaceutical and healthcare products and services,” commented Paola Caballeros, Executive Director of the Invest In Oriente Antioqueño Agency, who added that the agency arrived in the territory with the firm conviction of connecting the Eastern Antioquia subregion with national and international opportunities. The region has experienced a notable increase in strategic foreign investment in Eastern Antioquia, Colombia, close to two hundred million dollars, with high growth potential. In the tourism sector, the arrival of the Marriott International chain in Guatapé, with the future conversion of The Brown Hotel to its Autograph Collection brand in the reservoir area, demonstrates the region’s growing appeal as a top-tier destination.

In the agribusiness sector, world-renowned companies like Pepsico have found an ideal environment for their development and expansion in Guarne, with an investment of ninety million dollars. Likewise, the aviation sector has seen significant growth with the implementation of Avianca’s MRO (Avianca Aeronautical Maintenance Center in Rionegro), which has strengthened the sector’s technical and operational capacity.

VaxThera, a SURA company, will establish the country’s first human vaccine production plant, which will begin operations in 2025; and Life Factors, specialized in the development and production of blood-derived medications, aims to consolidate the region as a leader in biotechnological research and development. According to Caballero, the Rionegro Free Trade Zone provides a favorable environment for companies seeking tax and logistical advantages. “The proximity to Medellín, just 30 minutes by car, adds strategic value, making Eastern Antioquia an attractive investment and business development option. Additionally, with the future port operation in Puerto Antioquia, in Urabá, our region is strategically positioned, equidistant from the country’s main consumption centers and the new port, which will further enhance our competitiveness,” she noted, reinforcing the role of foreign investment in Eastern Antioquia, Colombia.

The progress in the East is partly due to robust institutions that have been fundamental to growth and innovation. Entities such as the Eastern Antioquia Chamber of Commerce, the Regional Autonomous Corporation of the Cuencas de los Ríos Negro y Nare (Cornare), and the CEO Business Guild, along with universities such as the Universidad Católica de Oriente, EAFIT, and the Universidad de Antioquia, and strategic allies like Asocolflores, Comfama, and Comfenalco, have facilitated effective collaboration between the public and private sectors, driving sustainable progress in the territory. “These institutions have been key in promoting clusters and the regional brand ‘Eastern Antioquia, a region that enchants,’ positioning the region as an attractive destination for investment, tourism, and sustainability,” stated Caballero.

For Camila Escobar, President of the Eastern Antioquia Chamber of Commerce, the region is consolidating as a benchmark for development and competitiveness in the country, thanks to its natural and strategic advantages. “With landscapes, biodiversity, water, and energy resources, and a privileged location with the airport and key road connections, foreign investment in Eastern Antioquia, Colombia, is likely to continue to grow,” she emphasized.

The Eastern Antioquia Chamber of Commerce has led key initiatives such as clusters for avocado, flowers, tourism, dairy, and technology, promoting competitiveness and innovation in these sectors. It plans to boost the life sciences cluster. These initiatives demonstrate the commitment of local institutions to fostering a vibrant and sustainable business and community environment.

Business Innovation in Eastern Antioquia

Among the most notable projects in this Antioquia region are ZONA E and the expansion of the San Nicolás Shopping Center. ZONA E is a significant real estate project offering corporate spaces for commercial, light industry, and hotel operations, with lots ready for construction and fully equipped with all necessary services and permits, allowing projects to start immediately. It is strategically located in Llanogrande, one of the rural areas of Rionegro, where some of the most luxurious properties in the country are found. According to the director of Invest in Oriente, multinationals like the Japanese company YKK have recognized ZONA E as “the ideal place for operational expansion, as it fosters growth and business innovation, ensures vital connections, and provides a dynamic environment for business.” The project is just 10 minutes from José María Córdova Airport, 30 minutes from Medellín via the Eastern Tunnel, and 5 minutes from the main shopping centers, service areas, banks, and other amenities. ZONA E has also established itself as a regional reference point for hosting high-profile corporate and social events. This project has further solidified the impact of foreign investment in Eastern Antioquia, Colombia.

Meanwhile, the San Nicolás Shopping Center, with 17 years of experience, is another pillar of commercial development in the region. It drives the retail sector and offers a wide range of services, dining, and entertainment in the territory. With the projected expansion for 2024 and 2025, it will become the most important commercial complex in Eastern Antioquia, comprising over 310 brands in a Gross Leasable Area (GLA) of 57,000 m² of commercial space. It will also include a devoted area for events and an auditorium.

The strategic location, commitment to sustainability, green areas, and additional services such as coworking, dog place, lactation area, outdoor gym, inclusive playgrounds, children’s area, and other spaces for visitors make San Nicolás the meeting point for families in Eastern Antioquia.

Both projects demonstrate the region’s ability to attract investment and develop infrastructure that drives the local economy.

A Growing Subregion

In the last 17 years, Eastern Antioquia has grown as if the population of La Estrella and Sabaneta had moved to the region, positioning it as the primary demographic and productive engine for the future metropolis of Medellín in 2050.

The scarcity of land in Medellín has also driven strong urban growth in the East, which in 2023 accounted for 24.9% of the 424 housing projects in Antioquia, according to the Colombian Chamber of Construction (Camacol). Rionegro, El Retiro, and La Ceja lead this activity, while Medellín ranks second with 21.7%, followed by Bello, Envigado, and Sabaneta.

Between 2017 and 2019, new home sales in the East exceeded 2,000 units annually. Rionegro leads this trend with a 54% share. Although they fell to 1,829 units in 2020, the market expects to surpass 2,000 in 2024 after a strong recovery in 2021 and 2022.

The urbanization growth in the East has shifted from selling recreational farms 15 years ago to building housing developments over the past decade, establishing the region as a high-demand residential and rural destination, especially in Guarne, El Retiro, La Ceja, and El Carmen. The increased housing development is also an indirect result of foreign investment in Eastern Antioquia, Colombia.

According to Eduardo Loaiza, manager of Camacol Antioquia, the San Nicolás Valley is now the epicenter of development in the region, surpassing the Aburrá Valley due to its temperate and green environment. “The East offers residential areas in natural settings, contrasting with the single-family homes of the Aburrá Valley,” explained Loaiza.

Rionegro, the principal municipality of the plateau, has driven transformation with the construction of the Eastern Tunnel, which has reduced travel time to Medellín. “This has increased housing demand, with sales rising from 400-500 units annually 12 years ago to more than 6,000 in recent years,” added the manager of Camacol Antioquia.

Investments in infrastructure, such as the integration of Empresas Públicas de Medellín and the airport’s growth, have also driven the East’s development. “The pandemic increased demand for open spaces, consolidating the region’s appeal,” noted Loaiza.

Development Figures

The GDP of the East grew by 174% in 11 years, with sustained growth in added value production exceeding 10%, according to the Eastern Antioquia Chamber of Commerce. The services sector leads this trend, followed by industry and agriculture. “Between 2016 and 2022, the East grew by 10.1% annually, establishing itself as the second most competitive region in Antioquia,” said Camila Escobar, executive president of the entity.

The formal employment rate in the East also reaches 41% in rural areas and 56.5% in urban areas, with municipalities such as La Ceja and Rionegro exceeding 60%, reflecting a robust labor market with opportunities in the region.

A combination of strategic location, growing infrastructure, and a clear focus on foreign investment drives this vibrant economy in Eastern Antioquia, Colombia.

Eastern Antioquia, Colombia, has become a prime destination for foreign investment due to its strategic location, expanding infrastructure, and vibrant economy. With over $200 million in foreign investment, the region benefits from its proximity to the José María Córdova International Airport and the Rionegro Free Trade Zone, enhancing its international competitiveness. Key sectors attracting investment include tourism, agribusiness, aviation, and biotechnology. Major projects like ZONA E, the San Nicolás Shopping Center expansion, and the establishment of Colombia’s first human vaccine production plant underscore the region’s potential. Robust institutions, collaborative public-private initiatives, and sustainable growth have further solidified Eastern Antioquia as a critical hub for development in Colombia.

At the end of July this year, Paraguay joined the exclusive group of South American countries with an investment-grade rating after Moody’s assigned the country a credit rating of Baa3 with a stable outlook. With this inclusion, Paraguay becomes the fifth country in the region to achieve this level, alongside Chile, Peru, Uruguay, and Colombia.

Obtaining “investment grade” improves international perception of the Paraguayan economy and will significantly boost foreign investment in South America in the coming years. Additionally, this rating helps maintain solid and sustained economic growth.

CHILE

The results of the countries in the region with investment-grade ratings reinforce the importance of this category. A standout example is Chile, which, since achieving this rating in the early 1990s, has attracted more than USD 307.2 billion in foreign investment in South America, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC).

Breaking down the figures, between 1991 and 1995, Chile accumulated USD 1.667 billion in foreign investments, which increased to USD 5.667 billion between 1996 and 2000. Later, between 2003 and 2007, investments totaled more than USD 39 billion, with an annual average of USD 7.8 million.

The period from 2008 to 2012 marked a notable increase, reaching USD 105 billion, with an average of USD 21 billion per year. Between 2013 and 2017, the figure moderated to USD 85 billion, representing an annual average of USD 17 billion.

Finally, between 2018 and 2022, investments totaled USD 55 billion. It is worth noting that in 2023 alone, Chile attracted more than USD 21 billion in foreign investment in South America in a single year.

On the other hand, it is worth mentioning that in June 2024, Moody’s decided to maintain Chile’s rating at A2 with a stable outlook, supported by the country’s institutional strength, governance, and solid fiscal position. For its part, S&P assigned Chile a rating of A with a negative outlook, while Fitch maintained a rating of A- with a stable outlook.

PERU

Peru, for its part, achieved investment-grade status in 2008. Since then, in more than 15 years, the country has received over USD 82 billion in foreign investment in South America, according to ECLAC.

Breaking down the figures, between 2008 and 2012, Peru accumulated more than USD 43 billion in investments, with an annual average of USD 8 billion. Between 2013 and 2017, investments totaled more than USD 35 billion, which equates to an annual average of USD 7.1 million.

Between 2018 and 2022, foreign investment reached approximately USD 34 billion, with an annual average of USD 6.8 million. Finally, in 2023, Peru attracted more than USD 3.9 billion in a single year.

Regarding Peru’s current rating, in April 2024, S&P downgraded its sovereign rating from BBB to BBB-, maintaining a stable outlook. This decision was motivated by the growing political uncertainty in the country, marked by the tense relationship between the executive and legislative branches.

For its part, Moody’s maintains Peru’s rating at Baa1, while Fitch rates it at BBB, both with negative outlooks.

COLOMBIA

Colombia regained its investment-grade rating in 2011, and since then, in more than 12 years, it has accumulated over USD 178 billion in foreign investment in South America.

Breaking down the figures, between 2011 and 2015, Colombia attracted more than USD 73.79 billion in investments, with an annual average of USD 14.758 billion. Between 2016 and 2020, foreign investment revenues totaled more than USD 61.633 billion, representing an annual average of USD 12.3 billion.

ECLAC data shows that in the last three years, from 2021 to 2023, foreign investments in Colombia reached USD 43.8 billion, with an average of USD 14 billion per year.

Colombia has a rating of Baa2 with a stable outlook from Moody’s. S&P, for its part, assigned it a rating of BB+ with a negative outlook, while Fitch rated the country at BB+ with a stable outlook.

It is worth recalling that in January 2024, S&P changed the outlook from stable to negative, maintaining the rating at BB+ due to moderate economic growth expectations.

URUGUAY

Uruguay regained its investment-grade rating in 2012, and since then, in more than 12 years, it has attracted over USD 31.5 billion in foreign investment in South America.

Breaking down the figures, between 2012 and 2016, Uruguay accumulated more than USD 13.619 billion in investments, with an annual average of USD 2.7 billion. Between 2017 and 2021, foreign investments totaled more than USD 9.8 billion, which equates to an annual average of USD 1.96 billion.

In the last two years, from 2022 to 2023, foreign investments in Uruguay totaled USD 8 billion, although a decline was recorded last year, according to ECLAC data.

On the other hand, Uruguay has a rating of Baa1, which is a stable outlook from Moody’s. S&P, for its part, assigned it a rating of BB+ with a stable outlook, while Fitch rated the country at BBB with a stable outlook.

It is worth mentioning that in December 2023, the rating agency Moody’s confirmed Uruguay’s rating at Baa2, improving the outlook from stable to positive. However, in March 2024, Moody’s decided to upgrade the rating from Baa2 to Baa1, changing the outlook to stable. This decision was due to solid institutions supporting the implementation of structural reforms and the continued adherence to fiscal and monetary policies, pointing to higher sustained growth rates than in previous periods.

Thus, Paraguay’s now-investment-grade rating opens up a great opportunity to attract more foreign investments, as seen in countries like Chile, Peru, Colombia, and Uruguay.

Maintaining this rating can drive the country’s economic growth and strengthen international confidence. This improves Paraguay’s image in global markets and places it in a favorable position to receive investments that will help achieve more robust economic development in the coming years.

Paraguay’s achievement of an investment-grade rating marks a significant milestone in the nation’s economic journey, positioning it alongside regional peers such as Chile, Peru, Colombia, and Uruguay. The experiences of these countries demonstrate that maintaining such a rating can catalyze substantial foreign investment in South America, fostering long-term economic growth and stability. For Paraguay, this newfound status presents an opportunity to attract capital inflows that could bolster infrastructure, create jobs, and drive innovation, further solidifying its economic foundation. However, sustaining this rating will require a continued commitment to sound fiscal policies, political stability, and institutional reforms. By learning from the successes and challenges of its neighbors, Paraguay can leverage this moment to ensure a prosperous future, enhancing its role in the global economy and improving the lives of its citizens.

According to Costa Rica’s Ministry of Foreign Trade data, the agreement with the South American nation will provide access to a market of over 17 million potential consumers. Costa Rica’s Minister of Foreign Trade, Manuel Tovar Rivera, confirmed that the FTA between Costa Rica and Ecuador will be effective on October 1. Tovar stated in the Costa Rican Congress that he would travel to Quito, the Ecuadorian capital, at the beginning of September to exchange the ratification instruments with the authorities of that country. The Legislative Assembly approved this trade agreement on May 30 with a vote of 45 Congress members. The Executive Power signed it on June 19.

While some agricultural products, such as bananas and pineapples, dairy products, beef, pork, and chicken, were excluded from the agreement, the Costa Rican Chamber of Exporters (Cadexco) estimates that the FTA between Costa Rica and Ecuador could significantly boost Ecuador’s exports by US$35 million annually. This potential growth is a promising sign for the future of trade between the two nations.

The FTA between Costa Rica and Ecuador is not just a trade agreement but a significant milestone for the Costa Rican market. It opens up new opportunities and a larger consumer base, marking a new era of economic growth and prosperity.

In 2023, trade in goods with Ecuador reached US$110 million, of which 70% corresponded to exports and 30% to imports. Costa Rica’s main product exports to Ecuador are pharmaceuticals, which accounted for US$8.23 million between January and October 2021. Iron and steel scrap and electrical materials follow this.

Current Trade Landscape

The current trade relationship between Costa Rica and Ecuador is dynamic and evolving, reflecting the broader trends of regional integration and economic diversification in Latin America. While the total value of trade between the two countries is relatively modest compared to their trade with more significant partners, it has shown steady growth over the years. This growth is underpinned by a shared interest in enhancing economic cooperation and taking advantage of complementary industries, a testament to the strength of the trade relationship. The latest available data shows that the total trade value between Costa Rica and Ecuador hovers around $250 million annually. This figure includes imports and exports, with a slight trade surplus generally favoring Ecuador. Despite its size, this trade relationship is vital for both countries as they seek to diversify their trade partners and reduce dependence on traditional markets such as the United States and Europe.

Key Goods Exchanged

The FTA between Costa Rica and Ecuador facilitates the exchange of a mix of agricultural products, manufactured goods, and services, reflecting the diverse economies of both nations. Exports from Costa Rica to Ecuador primarily include medical devices, electronics, and food products. Costa Rica has developed a robust medical device manufacturing sector, making it a key exporter of such goods in the region. Additionally, Costa Rica exports coffee, sugar, and prepared foodstuffs, which are well-received in the Ecuadorian market due to their quality and competitive pricing.

Imports from Ecuador to Costa Rica are dominated by agricultural products, particularly bananas, flowers, and seafood. Ecuador is one of the world’s largest exporters of bananas, and this fruit constitutes a significant portion of its exports to Costa Rica. Shrimp and fish, particularly tuna, are key export items, taking advantage of Ecuador’s rich marine resources. Additionally, Ecuador exports manufactured goods, such as textiles and plastics, to Costa Rica.

Areas for Future Growth

While the trade relationship between Costa Rica and Ecuador is well-established, there is significant potential for growth in several key areas:

Agricultural Innovation and Biotechnology: Both countries have strong agricultural sectors and could benefit from increased collaboration in agricultural technology and biotechnology. Costa Rica’s expertise in sustainable agriculture and organic farming could complement Ecuador’s strength in traditional agriculture, leading to innovations that enhance productivity and sustainability in both countries.

Renewable Energy: With both countries committed to expanding their renewable energy sectors, there is significant potential for bilateral cooperation in this area. Costa Rica is known for its leadership in renewable energy, mainly hydroelectric, wind, and geothermal power, while Ecuador has considerable solar and wind energy potential. Joint ventures, technology exchanges, and investment in renewable energy infrastructure could be fruitful areas for future collaboration.

Tourism: Tourism is a critical sector for both economies, and there is potential for joint marketing initiatives, tourism infrastructure development, and eco-tourism projects that could benefit both countries. Leveraging Costa Rica’s reputation as a global leader in eco-tourism and Ecuador’s unique attractions, such as the Galápagos Islands, could help boost visitor numbers and revenues in both nations.

Digital Economy and Services: Expanding digital trade and services represents another area with significant potential. Both countries are working to develop their digital economies, and increased collaboration in areas such as e-commerce, digital payments, and IT services could create new opportunities for businesses and consumers alike.

In conclusion, the FTA between Costa Rica and Ecuador marks a significant milestone in the economic relationship between the two nations, opening doors to new opportunities and reinforcing their commitment to regional integration. As they prepare to implement this agreement, both countries stand to benefit from enhanced trade, diversified economic partnerships, and collaboration in critical sectors such as agriculture, renewable energy, tourism, and the digital economy. By capitalizing on their complementary strengths and shared vision for sustainable development, Costa Rica and Ecuador can build a stronger, more resilient bilateral relationship that will contribute to their long-term economic prosperity and regional influence.

A developed Chancay Port in Peru will enable better utilization of the new reconfiguration of global trade.

Jhon Valdiglesias, a researcher at the Center for Asian Studies of the National University of San Marcos, recently commented that the upcoming commencement of operations at the Chancay Port will allow Peru to integrate into major global value chains, enabling the country to better capitalize on the new reconfiguration of global trade resulting from the trade war between the United States and China.

“Having the Chancay Port will open up more opportunities for us to integrate into global value chains, thereby ensuring better utilization of the free trade agreements that Peru has signed,” he told Agencia Andina.

He highlighted that this new port terminal would promote the creation of industrial and technological cities and new infrastructure, such as access roads, enabling the production of goods or parts of final products traded globally.

For example, in the case of reduced exports from China to the United States (as a result of the trade war), Valdiglesias mentioned that the economies that are well integrated into global value chains and export manufactured products will replace these shipments.

The economist will speak this Thursday on the panel “Trade and Investment for Inclusive and Interconnected Growth” as part of the preparatory meetings for the Asia-Pacific Economic Cooperation (APEC) Leaders’ Summit.

Exporting Manufactures

“With global value chains, it is easier to export manufactured products because there is no need for the final product, only one of the inputs. This is a great opportunity for less developed countries to take advantage of,” he emphasized.

He mentioned that the countries most benefited from this new reconfiguration of global trade have been primarily Mexico, Vietnam, and Taiwan due to their strong integration into global value chains.

“In the specific case of Mexico, one of its great advantages is its location, as it is close to the United States, which has facilitated the flow of many American investments into that country,” he explained.

Additionally, they receive investments from Asian countries to construct plants to sell to the United States, taking advantage of their proximity.

More Opportunities

He commented that Peru must be more aware of this new reality to capitalize on it better. “So far, very little has been achieved because Peru is primarily a raw material exporting country,” he noted.

In this regard, he reiterated that countries like Mexico, Vietnam, Taiwan, and Canada are better integrated into global value chains, which opens up more opportunities to take advantage of the new international trade scenario.

“If a country is part of the global value chain, it exports a high-value-added input or a technology-intensive product to produce a final product,” he explained.

Technology Transfer

He emphasized that being part of the Asia-Pacific Economic Cooperation (APEC) allows us to continue advancing by incorporating best practices for manufacturing development.

“Being in APEC allows us to continue expanding research and keep the debate going to advance the economy as a whole,” he said.

“Technology is the only way to advance in international trade and economic growth. While it is important to encourage foreign investment, it is also crucial to promote the transfer of new technologies,” he stressed.

In this regard, he mentioned China’s experience, a country that negotiated with international companies that wanted to establish themselves in its Special Economic Zones and ensured technology transfer.

“Without technology, there are no global value chains, and there is no sustained high growth to overcome the issues we know, such as poverty, inequality, insecurity, among others,” he emphasized.

Chinese role in the development of the Chancay Port

China has played a pivotal role in developing the Chancay Port. This critical infrastructure project marks a significant step in Peru’s efforts to become a major player in global trade. The port, located just north of Lima, is a joint venture between the Chinese state-owned company COSCO Shipping and the Peruvian company Volcan Compañía Minera. China’s involvement is financial and strategic, as the port is part of China’s broader Belt and Road Initiative (BRI), which seeks to enhance global connectivity through infrastructure investments. By investing in the Chancay Port, China is establishing a crucial logistics hub on the Pacific coast of South America, facilitating trade between Asia and Latin America. This investment aligns with China’s goals of expanding its regional influence and securing industry supply chains. For Peru, the partnership with China offers access to significant capital, advanced technology, and expertise in large-scale port operations. The development of the Chancay Port under China’s guidance is expected to transform Peru into a critical node in global value chains, boosting its export capacity and economic growth while strengthening bilateral relations between the two nations.

The development of the Chancay Port represents a critical milestone in Peru’s economic evolution, serving as a gateway for the country to fully integrate into global value chains and diversify its economic activities beyond raw material exports. By facilitating the production and export of higher value-added goods, the port will enable Peru to tap into new opportunities within the reconfigured global trade landscape, particularly in the wake of shifting dynamics between significant economies like the United States and China. Moreover, this project will enhance Peru’s competitiveness and attract foreign investment, promote technological advancement, and catalyze the growth of industrial and technological hubs across the country. In essence, the Chancay Port is poised to be a pivotal infrastructure asset that will drive inclusive and sustainable economic growth, helping Peru to achieve a more prominent role in the international market while addressing domestic challenges such as poverty, inequality, and economic security.